Arizona Real Estate License Practice Exam 2025 - Free Real Estate Practice Questions and Study Guide

The correct answer reflects the principle of progression, which suggests that a property can increase in value when it is located in an area with higher-value properties. In this case, the run-down house is situated in a good neighborhood, meaning that the surrounding higher-value properties can positively influence its worth. This alignment with the principle of progression emphasizes that the overall favorable characteristics of the neighborhood can enhance the value of properties, even those that may be in less than ideal condition.

By contrast, the principle of regression would imply that a higher-value property might experience a decrease in value due to the presence of less desirable or lower-valued properties nearby, which does not apply in this scenario since the run-down house is benefitting from its good location. Thus, properties in good neighborhoods, even if they are not in prime condition, can still see value appreciation due to the surrounding positive influences.